Retailers describe lingering effects of U.S. port congestion

Nike says West Coast dockworker dispute hurt sales.

Excerpt from American Shipper | By: Eric Kulisch | March 25, 2015

Several major U.S. brands that released financial results last week described how the recent dysfunction at West Coast ports affected their bottom line.

The labor turmoil that severely reduced port productivity during the holiday season and beyond will have a lingering impact on Nike’s supply chain and sales for months to come, officials at the athletic footwear and apparel maker said during a conference call with analysts to discuss the company’s third quarter results.

Revenue growth in North America likely would have been higher than 6 percent if not for the port congestion that delayed some shipments, Trevor Edwards, the president of Nike Brand, said.

“We do expect it will take a few quarters to return to fully normalized product flow as there are a significant number of containers to be cleared from the ports on the West Coast,” said Edwards.

Nike figures to have somewhat higher inventory levels and lower margins for the next few quarters as it tries to rebalance its supply mix to demand, Chief Financial Officer Don Blair added.

Sales were also impacted, he said, by ice storms in the South that slowed deliveries of goods to stores.

Nike has been able to mute the impact of the strong dollar because its trading arm pays overseas factories through a basket of currencies, offsetting exposure to any single currency, Blair said. And, he said, the Beaverton, Ore. Company has benefited from sourcing in many countries where currencies are weak.

Women’s fashion apparel retailer New York & Co. said inventory during its fourth quarter ended Jan. 31 increased 12.4 percent compared to last year because of higher levels of in-transit goods from longer lead times associated with the port delays. As part of its contingency plan, the company also pre-bought some merchandise to avoid the port disruptions, which slightly increased in-store inventory.

Williams-Sonoma last week also said the port situation hurt sales.

West Coast ports are slowly becoming unclogged, although it could be another two months before ports are functioning at more normal levels, officials say. The International Longshore and Warehouse Union reached a tentative deal Feb. 23 on a multi-year contract with the Pacific Maritime Association. Membership in both organizations must still ratify the contract.